The proposal by four nations to freeze oil production at January's levels will make no difference to current market fundamentals, according to an IEA official.
Neil Atkinson, head of the International Energy Agency's oil market division, said the four producers who proposed the freeze were not anticipated to increase production, and lacking a cut, the outlook does not change.
Saudi Arabia, Russia, Venezuela and Qatar agreed to the freeze if other producers join in. Russia has said it would like to have consultations on a preliminary deal completed by March 1.
"It makes no difference to current market fundamentals," said Atkinson at the annual IHS CERAWeek conference in Houston on Monday.
"We are told this is the beginning of a process," Atkinson said, referencing a comment made by Saudi Arabia Oil Minister Ali al-Naimi in discussing the proposed freeze last week.
The market has assumed Al-Naimi was suggesting the door would be open to talks about a production cut. Naimi speaks at the IHS CERAWeek conference Tuesday.
Atkinson said he would not speculate on whether producers would ultimately agree to an output cut.
A not-so-deep freeze
While oil has lifted off its low in the $20s, Atkinson said it's not clear whether the price has bottomed or not. "It did get below $30 a barrel and sat there," he said.
In a commentary on CNBC.com Monday, IHS vice chairman Daniel Yergin claimed, "This freeze should not be confused with a cut. It is a status quo — holding production constant with the expectation that rising demand, plus production declines in some countries, will help bring the market back into balance."
Yergin also said that amid the current outlook, "managements may believe that the market could stabilize later in 2016 or 2017, but the prudent policy is to cut budgets further."
The IEA outlook for the U.S. is a tale of two tapes. It predicts that U.S. shale oil production could fall by 600,000 barrels per day (bpd) this year and another 200,000 bpd in 2017, a forecast that led to big gains in oil prices on Monday, but that the U.S. will lead the world in production gains in five years.
